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Ms Kaye said the average levy, which includes the licence levy and petrol levy, would fall by 33 per cent.

"It will save New Zealanders $218 million, and follows $438 million of cuts to motor vehicle levies last year," Ms Kaye said.

"This means the average motor vehicle levy has fallen from $330 to $130 since 2014."

ACC now uses a new system to assign a "risk rating" to each brand of car and charge motorists less for driving safer cars.

It has had problems since its introduction. Last June the Herald revealed a blunder meant about 15,000 motorists were denied the cheaper registrations they were entitled to.

The error has come about because ACC's computer system refused to recognise safer "sub-species" of popular vehicles. For example, it had classified the Toyota Corolla Spacio - considered among the safest vehicles - as the marginally lower rated Toyota Corolla.

The levy-cutting scheme has faced criticism for targeting older cars with higher rates, bringing accusations of it being a tax on those least able to afford newer and safer cars.

"It was clear the new approach needed improved data for some cars and refinements to policy to ensure greater integrity of the system for some models. As part of last year's public levy consultation, ACC consulted on my behalf on a number of proposed improvements to the system."

As a result, changes will be made to the way vehicles are risk rated, from July 1.

"For example, the system now better identifies when improvements have been made to particular models of car, and it better recognises cars that have different names but which are essentially identical vehicles," Ms Kaye said.

"Enhancements have also been made to ensure greater robustness of the crash data that's used to help generate risk ratings. This is a new system that involves thousands of models of cars, so it's possible there will be further refinements in years to come."

ACC annual licence levies per risk band from 1 July for light petrol vehicles

Band 1 - $84.98

Band 2 - $61.87

Band 3 - $48.65

Band 4 - $25.54

ACC annual licence levies per risk band from 1 July for light diesel vehicles

What body type?

What year?

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Calculations are based on an interest rate of 10% per annum over a 3 year term with no deposit.
This budget tool is intended as a guide and starting point only and is not in any way a finance quotation. Please refer here for our site terms.

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